Correlation Between Franklin High and Fixed Income
Can any of the company-specific risk be diversified away by investing in both Franklin High and Fixed Income at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Franklin High and Fixed Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Yield and Fixed Income Shares, you can compare the effects of market volatilities on Franklin High and Fixed Income and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Franklin High with a short position of Fixed Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Fixed Income.
Diversification Opportunities for Franklin High and Fixed Income
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Fixed is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Fixed Income Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fixed Income Shares and Franklin High is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Franklin High Yield are associated (or correlated) with Fixed Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fixed Income Shares has no effect on the direction of Franklin High i.e., Franklin High and Fixed Income go up and down completely randomly.
Pair Corralation between Franklin High and Fixed Income
Assuming the 90 days horizon Franklin High Yield is expected to generate 0.75 times more return on investment than Fixed Income. However, Franklin High Yield is 1.34 times less risky than Fixed Income. It trades about 0.12 of its potential returns per unit of risk. Fixed Income Shares is currently generating about 0.09 per unit of risk. If you would invest 860.00 in Franklin High Yield on September 14, 2024 and sell it today you would earn a total of 66.00 from holding Franklin High Yield or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Yield vs. Fixed Income Shares
Performance |
| Timeline |
| Franklin High Yield |
| Fixed Income Shares |
Franklin High and Fixed Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Fixed Income
The main advantage of trading using opposite Franklin High and Fixed Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Fixed Income can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fixed Income will offset losses from the drop in Fixed Income's long position.| Franklin High vs. Gabelli Convertible And | Franklin High vs. Allianzgi Convertible Income | Franklin High vs. Lord Abbett Convertible | Franklin High vs. Advent Claymore Convertible |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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